Mohammad Shoaib is far from a household name. He is not a politician, a cricketer, or a famous lawyer whose face is splashed on the front page of the papers. In fact, he isn’t even peripherally famous. But if you have ever had anything to do with Pakistan’s asset management sector, it is a name you will recognise very well.
At a time when mutual funds and investing were not even a concept in Pakistan, Shoaib established Al Meezan Investments. Not only was this an asset management company, it was a Shariah Compliant investment fund which allowed investors to invest in a way consistent with their religious beliefs. For nearly three decades, he shepherded a team that at its height grew to over 600 employees managing over $1.6 billion in assets.
He was one of the founding fathers of asset management in Pakistan, and under him Al Meezan grew to great heights. Then, early last year, he suddenly resigned from his position as CEO. Initially, it seemed he was just stepping back and preparing to retire. Then the rumours started to circulate. These were not corroborated by the Securities and Exchange Commission of Pakistan (SECP), but managed to cause plenty of commotion in the asset management sector.
Now, nearly a year after he left the company he built from scratch, Mr Shoaib is embarking on building another. He has been appointed Chief Executive Officer (CEO) of Lucky Investments Limited, a new asset management company supported by one of the largest conglomerates in the country. The commitment of Lucky in terms of making this venture a success is clear as they have chosen Mohammad Shoaib to captain this ship. The man literally wrote the book on Shariah Compliant fund management in the country and has the skill set to do so. But will lightning strike twice for Shoaib?
Corporate Landscape
The corporate landscape of Pakistan is dotted with different companies and their unique structures. Many of the large groups operating look to invest in their own ventures through cross holdings or look to keep all of its investment ventures in house. This keeps the investment within their control and they get to use these funds in order to build their own position. In such a corporate culture, there are business groups which look to expand their portfolio of services beyond the conventional fields. Lucky is the new one which has decided to set up its own AMC.
Asset Management is a field which is mostly run and handled by banks or financial institutions. The nature of an asset management company is to collect funds from the market and then invest these funds into assets that it is able to manage. These assets are categorised and separated based on the risk and return yielded which creates mutual funds that are maintained. New investors are sought to raise additional funds and old investors are allowed to liquidate their positions. In order to manage and run these funds, the AMC charges a fee for doing so which is tied to the assets it is managing. Banks and financial institutions are able to run AMCs easily as they deal with funds on a daily basis and they can use mutual funds in order to manage the risk and return that they require in order to remain profitable. They also encourage their depositors to invest in these funds in order to get a better return compared to fixed deposits.
In a field dominated by banks and financial institutions, there are certain groups which have looked to run their own AMC. Atlas and Lakson are two of the bigger names which expanded their portfolio of services and added AMC as a service they provided in the market. Now it seems like Lucky is also interested in establishing its own company. There is a commitment at the company to look to venture into new business avenues that it has not contemplated before. As its first foray into this field, Lucky has acquired the AMC that was established by Interloop and now has a license to operate such a company. Interloop was only able to run one equity fund which had Rs 2.16 crores under management. It can be expected that Lucky will look to expand and increase the portfolio and funds it manages.
Lucky group is a gargantuan of the corporate world. Run by Younus Brothers group, the company has varied interests from power generation, chemical manufacturing, auto assembly, cement manufacturing, textile mills and a mall to name a few. The empire has been built on due to the ambition of its owners who are always looking for an opportunity to expand their footprint. This new venture is in line with this intent. The group feels that there is an opportunity which can complement its diversified revenue streams. This is normal for a company looking to grow out of its own shell. The thing that is raising eye brows is who they have chosen to run the company for them. Mohammad Shoaib has been chosen as the Chief Executive Officer for Lucky Asset Management Limited.
The Mohammad Shoaib story
Shoaib is known as being the person who built Al Meezan Investments from scratch up into the behemoth it is today. Al Meezan was set up in 1995 and the goal of the company was to establish itself as being a Shariah Compliant option available to its investors. Shoaib was able to use his education and practice what he had learned in his past and apply them to a fund management style which was still in its infancy in the country. He had studied at the Government College of Commerce and Economics and then finished his MBA at Institute of Business Administration in finance and marketing.
Shoaib’s professional career started at Pakistan Kuwait Investment in 1990 where he became the senior vice president of capital markets in a space of five years. In 1995, Shoaib felt that there was a dearth of investment opportunities in the country which could be availed by the investors. A small fund named Al Meezan was established whose sole purpose was to provide Shariah Compliant solutions to the market ranging from equity, sector, balanced, asset allocation, fixed income and voluntary pension funds.
During his tenure at Al Meezan, Shoaib showed his dedication to his work by first becoming a CFA Charterholder in 1997. In terms of the finance industry, the CFA charter is considered the gold standard and is the most sought after certification by people interested in working in finance. Shoaib was also the founding president of the CFA Society in Pakistan in 2002. In addition to this, he has held many other voluntary positions from nominee director on the board of Pakistan Stock Exchange, board member of Institute of Financial Capital Markets and member of Academic Board of Institute of Business Administration. He has also held the position of Chairman at Mutual Funds Association of Pakistan which is the body that oversees the performance and issues related to the mutual fund industry.
After nearly three decades at the helm, Shoaib has been able to make Al Meezan into one of the leading AMCs. It is a testament to the work ethic and dedication of Shoaib that the AMC has assets under management of more than Rs 550 billion that it is managing currently. The company has an investor base of more than 300,000 investors which range from institutions to individuals.
In terms of the mutual fund industry, the fund is only second to Al Habib Asset Management which is leading the industry. The feat becomes even more exceptional when it is considered that Islamic banking and finance has only recently emerged as an alternative to conventional banking. In terms of Islamic finance, the fund is the market leader and trend setter with around a fifth of the market share when conventional AMCs are considered as well.
The resignation
In March of 2024, it was announced by Al Meezan that its CEO was leaving the company after 29 years of service at the company. The move was considered to be just a change at the top with Shoaib contemplating retirement and wanted to step back from his role. There were reports circulating around the time that a letter was sent by the SECP to the board of Al Meezan. As the letter was taken into consideration by the board, it was alleged that personal trades were being carried out by the CEO and his family which were against the regulations of the SECP. An allegation of front running was being made which would benefit the CEO at the cost of its investors and the capital markets.
While rumors around this letter were floating around, the resignation was given by Mohammad Shoaib. When SECP was approached to get access to any such information, it was stated that “(w)hile we cannot disclose specific details or documents pertaining to any individual or entity due to confidentiality, we can confirm that no formal investigation has been carried out by the SECP against Mr. Mohammad Shoaib in connection with the matter referenced.”
In order to be appointed CEO of an AMC, SECP needs to provide an approval to make sure that the person is fit and proper to run the company and manage the funds of others. The CEO is not just running the affairs of the company which has appointed it but also has to make sure that the interests of the investors are kept in mind. Funds use the life savings of small investors and it has to be made sure that the person looking after these funds is fit enough to do so. As the powers of the CEO are huge, the SECP needs to consider the background in order to approve the appointment. In case of Shoaib, the SECP has stated that “(a)s part of the SECP’s regulatory framework, appointment of a Chief Executive Officer is subject to a rigorous fit-and-proper test which was also applicable on Mr. Mohammad Shoaib’s appointment as CEO of Interloop Asset Management Company (now Lucky Investments Limited).”
A new beginning
After a 29 year career working with Al Meezan, it is clear Shoaib is not quite done with the asset management business. Lucky Investments has recently acquired an AMC license from Interloop Asset Management which will allow it to manage and operate the fund under its own banner. The fund will be Shariah Compliant and Shoaib has been appointed to run it. The fact that such a huge name has been brought in shows that Lucky is committed to making this new venture work and they are prepared to bring in the big guns in order to do so.
As Lucky Investments embarks on its journey, it would be expected that the company is able to follow the footsteps of Al Meezan and create a fund which matches the size and magnitude of Shoaib’s earlier creation. The focus of the new fund is to take over the crown of Al Meezan as the market leader in the Shariah complaint industry. Lucky has a long way to go and has big shoes to fill but it seems like they have chosen the best man for the job to do so. As the company builds its team and fund managers, the goal would be to find avenues of investment which yield a higher return. This could be challenging considering how government securities are going through a negative yield curve and interest rates are falling. With assets seeing lower returns, the objective would be to outpace the benchmark which was easier when interest yielding assets were making higher returns. With stiff competition from Al Meezan and changing economic times, it feels like Shoaib will have his work cut out for him.
